Food And Gasoline Price Increases Remain Worrisome

January 5, 2011

A number of foodservice industry observers have expressed concern that rising food and gasoline prices could undercut what remains a fragile recovery of the market. Higher food prices undercut operators’ ability to make money on “value meals,” which are driving a lot of operator traffic. And higher gasoline prices eat into consumers’ disposable income for foodservice. The numbers from November and December won’t make them any less concerned.

Wholesale food prices for so-called “finished foods” rose a seasonally adjusted 1% in November, the fourth increase in the past five months, according to data from the Bureau of Labor Statistics’ Producer Price Index. While finished foods’ prices fell 0.1% in October, such prices rose 1.2% in September. “Finished” energy prices were up 2.1% in November, following a 3.7% increase in October. Gasoline prices were the big contributor, rising 4.7% during the month.

The increases in wholesale food prices have led both foodservice operators and grocery retailers to begin raising prices again, according to consumer price data from the BLS. Food-at-home prices jumped 0.3% in November, while foodservice menu prices were up another 0.1%. Retail food prices have risen for four consecutive months while foodservice operators have increased prices three of the past four months.

And gasoline prices have continued to increase throughout December, according to weekly price data from the federal U.S. Energy Information Administration. Average gasoline prices rose seven cents for the week ended Dec. 27, and stood at $3.052, 44.5 cents higher than at this time last year. Diesel fuel is 56.2 cents higher.